San Francisco-based Twitter reported revenue of $1.2 billion in the second quarter, falling short of average analyst estimates calling for $1.3 billion and slipping 1% from the same period last year.
The company also reported a worse-than-expected loss of $270 million, or 35 cents per share—compared to expectations for a loss of 7 cents per share and a profit of $66 million in the second quarter last year.
In its earnings release, Twitter blamed the disappointing performance on advertising industry headwinds associated with broader economic concerns and uncertainty around Musk’s deal to buy Twitter and take it private.
The firm says it’s not hosting an earnings call, issuing a shareholder letter or sharing financial projections with the deal still in flux.Twitter also disclosed it spent about $33 million related to the acquisition in the second quarter and $19 million on costs associated with layoffs, including some affecting about a third of the firm’s recruiting team.
Twitter stock futures were down 2% to about $38.50 within minutes of the announcement; shares have plunged more than 40% over the past year, while the S&P 500 has fallen about 16%.
Twitter stock has been on a wild ride since Musk acquired a 9% stake in the firm in April, announced a bid to acquire it at a massive premium weeks later and then decided he was “terminating” the deal earlier this month. Shares skyrocketed as much as 60% as the deal gained traction, but soon started collapsing as Musk voiced concerns about fake and spam accounts on the platform. Though Twitter’s board had already approved the takeover, Musk backed out on July 8, pushing shares down nearly 40% from their April highs.
On July 12, Twitter’s board sued Musk for backing out of the deal, asking a Delaware judge to order the billionaire to move forward with the agreement. The trial is being scheduled for October, according to Twitter on Friday. In a note to clients, Wedbush analyst Daniel Ives called Musk’s decision “a disaster scenario for Twitter,” predicting a long legal battle for Twitter to either force the deal through or get Musk to pay a $1 billion termination penalty.
$30 billion. That’s Twitter’s market value on Friday, roughly 22% below Musk’s proposed takeover bid.
I’m a senior reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill..
Source: Twitter Posts $270 Million Loss In First Earnings Report Since Elon Musk ‘Terminated’ $44 Billion Takeover Deal
Critics by: Shannon Bond
Twitter and Elon Musk are scheduled to face off in a five-day trial in October over the billionaire’s change of heart about buying the social media company for $44 billion. The decision from Chancellor Kathaleen McCormick, the chief judge at Delaware’s Court of Chancery, was a blow to Musk, whose lawyers sought a trial early next year. But with the Twitter deal now in limbo, McCormick agreed to fast-track the trial during a hearing over Zoom on Tuesday.
“The reality is that delay threatens irreparable harm to the sellers and Twitter,” McCormick said in her ruling from the bench. “The longer the delay, the greater the risk.” Earlier this month, the Tesla and SpaceX CEO said he was calling off the deal because of concerns over how many accounts on Twitter are fake or spam. Last week, Twitter sued Musk to force him to go through with the purchase, accusing him of using the issue of automated bot accounts as a pretext to get out of a deal that was no longer good for him financially.
The October trial date is a win for Twitter, which had requested an expedited four-day trial in September. The uncertainty caused by Musk’s threat to pull out of the deal “inflicts harm on Twitter every hour of every day,” Bill Savitt, Twitter’s lead lawyer, said at the hearing. Musk’s lawyers argued they need more time to investigate his concerns over Twitter’s user figures, and that a trial should not take place before February.
Andrew Rossman, Musk’s lawyer, called Twitter’s request for a September trial “completely unjustifiable,” saying it would take months to analyze Twitter’s data and consult experts. He said Twitter had already dragged its feet about sharing information that Musk said he needed to vet the company’s estimates of fake accounts.
“The answers that he got were alarming,” Rossman said. “The runaround that he got from the company was even more alarming.” Savitt accused Musk of trying to “sabotage” the deal and run out the clock past April 2023, when the $13 billion Musk has lined up from banks to fund the deal expires.
“Mr. Musk has made perfectly clear he has no intention of keeping any of his promises,” Savitt said. “Candidly, we suspect that Mr. Musk wants to delay this trial long enough to never really face a reckoning.”Twitter argued Musk’s fixation on bots is a distraction from the question facing the court: whether Musk broke his legal agreement to buy the company.
Twitter has long said that it estimates less than 5% of daily users are not real people. Musk says he believes the true figure is much higher, but has not presented any evidence for his claim that Twitter is misrepresenting the prevalence of fake accounts on the platform.
Twitter’s Lawsuit Against Elon Musk: The Big Picture
Devin Nunes drops California lawsuit against man he claims was ‘Twitter cow’s’ spouse
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